Chapter 342
2023 -- H 5855 SUBSTITUTE A
Enacted 06/26/2023

A N   A C T
RELATING TO INSURANCE -- UNFAIR CLAIMS PRACTICES ACT

Introduced By: Representatives O'Brien, McEntee, Craven, Caldwell, Dawson, Serpa, Bennett, Diaz, Vella-Wilkinson, and Slater

Date Introduced: March 01, 2023

It is enacted by the General Assembly as follows:
     SECTION 1. Section 27-9.1-4, of the General Laws in Chapter 27-9.1 entitled "Unfair
Claims Settlement Practices Act" is hereby amended to read as follows:
     27-9.1-4. “Unfair claims practices” defined.
     (a) Any of the following acts by an insurer, if committed in violation of § 27-9.1-3,
constitutes an unfair claims practice:
     (1) Misrepresenting to claimants and insured relevant facts or policy provisions relating to
coverage at issue;
     (2) Failing to acknowledge and act with reasonable promptness upon pertinent
communications with respect to claims arising under its policies;
     (3) Failing to adopt and implement reasonable standards for the prompt investigation and
settlement of claims arising under its policies;
     (4) Not attempting in good faith to effectuate prompt, fair, and equitable settlement of
claims submitted in which liability has become reasonably clear;
     (5) Compelling insured, beneficiaries, or claimants to institute suits to recover amounts due
under its policies by offering substantially less than the amounts ultimately recovered in suits
brought by them;
     (6) Refusing to pay claims without conducting a reasonable investigation;
     (7) Failing to affirm or deny coverage of claims within a reasonable time after having
completed its investigation related to the claim or claims;
     (8) Attempting to settle or settling claims for less than the amount that a reasonable person
would believe the insured or beneficiary was entitled by reference to written or printed advertising
material accompanying or made part of an application;
     (9) Attempting to settle or settling claims on the basis of an application that was materially
altered without notice to, or knowledge or consent of, the insured;
     (10) Making claims payments to an insured or beneficiary without indicating the coverage
under which each payment is being made;
     (11) Unreasonably delaying the investigation or payment of claims by requiring both a
formal proof of loss form and subsequent verification that would result in duplication of
information and verification appearing in the formal proof of loss form;
     (12) Failing in the case of claims denials or offers of compromise settlement to promptly
provide a reasonable and accurate explanation of the basis of those actions;
     (13) Failing to provide forms necessary to present claims within ten (10) calendar days of
a request with reasonable explanations regarding their use;
     (14) Failing to adopt and implement reasonable standards to assure that the repairs of a
repairer owned by or required to be used by the insurer are performed in a workmanlike manner;
     (15) Misleading a claimant as to the applicable statute of limitations;
     (16) Failing to respond to a claim within thirty (30) days, unless the insured shall agree to
a longer period;
     (17) Engaging in any act or practice of intimidation, coercion, threat, or misrepresentation
of consumers rights, for or against any insured person, claimant, or entity to use a particular rental
car company for motor vehicle replacement services or products; provided, however, nothing shall
prohibit any insurance company, agent, or adjuster from providing to such insured person, claimant,
or entity the names of a rental car company with which arrangements have been made with respect
to motor vehicle replacement services; provided, that the rental car company is licensed pursuant
to § 31-5-33;
     (18) Refusing to honor a “direction to pay” executed by an insured, claimant, indicating
that the insured or claimant wishes to have the insurance company directly pay his or her motor
vehicle replacement vehicle rental benefit to the rental car company of the consumer’s choice;
provided, that the rental car company is licensed pursuant to § 31-5-33. Nothing in this section shall
be construed to prevent the insurance company’s ability to question or challenge the amount
charged, in accordance with its policy provisions, and the requirements of the department of
business regulation; provided that, the insurance company promptly notifies the rental car company
in writing of the reason. The written notification shall be made at or before the time that the
insurance company submits payment to the rental car company;
     (19) Modifying any published manual, i.e., Motor’s Auto Repair Manual, Mitchells, or any
automated appraisal system, relating to auto body repair without prior agreement between the
parties;
     (20) Failing to use a manual or system in its entirety in the appraisal of a motor vehicle;
     (21) Refusing to compensate an auto body shop for its documented charges as identified,
through and based on, the most current version of automotive industry-recognized software
programs or systems for paint, body, and refinishing materials in auto body repair claims, utilized
in auto body repair, including, but not limited to, programs such as Mitchell’s RMC, PMC Logic,
Paint, Micromix, or a other paint manufacturer’s programs. An insurer shall not discount
documented charges by failing to use a system in its entirety, including an automotive industry
standard markup;
     (22) Refusing to acknowledge and compensate an auto body repairer for documented
procedures identified as necessary by the original equipment manufacturer, paint manufacturer,
when included in the repairer's appraisal, or when requested by the repairer (i.e., components that
cannot be reused/reinstalled: requiring clips, retainers, and hardware);
     (22)(23) Failing to comply with the requirements of § 31-47-12.1;
     (23)(24) Failure to have an appraisal performed by a licensed appraiser where the motor
vehicle has sustained damage estimated to exceed two thousand five hundred dollars ($2,500). The
licensed appraiser referred to herein must be unaffiliated with the repair facility repairing the
subject motor vehicle; must perform a physical inspection of the damaged motor vehicle; and may
not perform an appraisal based upon pictures of the damaged motor vehicle;
     (25) Failure of an insurer's assigned appraiser, or representative, to promptly schedule an
appointment for an appraisal of a damaged vehicle with the auto body repair shop, at an agreed
upon date and time, between normal business hours;
     (24)(26) Failure to perform an initial appraisal within three (3) business days after a request
is received from an auto body repair shop, provided the damaged motor vehicle is on the premises
of the repair shop when the request is made, and failure to perform a supplemental appraisal
inspection of a vehicle within four (4) business days after a request is received from an auto body
repair shop. If the insurer's appraiser fails to inspect the damaged motor vehicle within the allotted
number of business days for an initial appraisal or a supplemental appraisal, the insurer shall forfeit
its right to inspect the damaged vehicle prior to repairs, and negotiations shall be limited to labor
and the price of parts and shall not, unless objective evidence to the contrary is provided by the
insurer, involve disputes as to the existence of damage or the chosen manner of repair. The time
limitations set forth in this subsection may be extended by mutual agreement between the auto body
repair shop and the insurer;
     (27) Refusing to extend the rental vehicle coverage requirements of an insured or claimant
proportionally to claim delays caused by the insurer.
     (25)(28) Designating a motor vehicle a total loss if the cost to rebuild or reconstruct the
motor vehicle to its pre-accident condition is less than seventy-five percent (75%) of the “fair
market value” of the motor vehicle immediately preceding the time it was damaged:
     (i) For the purposes of this subdivision, “fair market value” means the retail value of a
motor vehicle as set forth in a current edition of a nationally recognized compilation of retail values
commonly used by the automotive industry to establish values of motor vehicles;
     (ii) Nothing herein shall be construed to require a vehicle be deemed a total loss if the total
cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is greater than seventy-
five percent (75%) of the fair market value of the motor vehicle immediately preceding the time it
was damaged;
     (iii) Nothing herein shall prohibit an insurance company from agreeing to deem a vehicle
a total loss at the vehicle owner’s request and with the vehicle owner’s express written authorization
if the cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is less than
seventy-five percent (75%) of the “fair market value” of the motor vehicle immediately preceding
the time it was damaged;
     (iv) If condition adjustments are made to the retail value of a motor vehicle designated a
total loss, all such adjustments must be in accordance with the standards set forth in the current
edition of a nationally recognized compilation of retail values, commonly used by the automotive
industry, used by the insurer to determine the retail value of the vehicle; and all such adjustments,
including prior damage deductions, must be itemized, fair, and reasonable; and
     (v) When a vehicle is deemed a total loss, if the insurer is not retaining the salvage, the
insurer must notify the owner of the vehicle in writing of the requirements of obtaining both a
salvage title and a reconstructed title from the department of motor vehicles pursuant to chapter 1
of title 31, and must obtain, in writing, the owner’s consent and acknowledgement that the insurer
is not retaining the salvage and include a statement of the owner’s obligation and potential costs to
dispose of or otherwise retain the salvage;
     (26)(29) Negotiating, or effecting the settlement of, a claim for loss or damage covered by
an insurance contract with an unlicensed public adjuster acting on behalf of an insured. Nothing
contained in this section shall be construed to preclude an insurer from dealing with any individual
or entity that is not required to be licensed under chapter 10 of title 27;
     (27)(30) Refusing to pay an auto body repair shop for documented necessary sublet
services paid out to vendors or incurred by the auto body repair shop, for specialty or unique
services performed in the overall repair process, including costs and labor incurred to research,
coordinate, administrate, or facilitate the necessary sublet service, and an automotive industry
standard markup. Examples of sublet services include, but are not limited to, towing, transportation,
suspension, alignments, electronic calibrations, diagnostic work, mechanical work, and paid
charges to release a vehicle.
     (b)(1) Nothing contained in subsections (a)(19), (a)(20), and (a)(21) of this section shall be
construed to interfere with an auto body repair facility’s contract with an insurance company.
     (2) If an insurance company and auto body repair facility have contracted under a direct
repair program or any similar program thereto, the provisions of subsections (a)(19), (a)(20), and
(a)(21) of this section shall not apply.
     (3) If the insured or claimant elects to have the vehicle repaired at a shop of his or her
choice, the insurer shall not limit or discount the reasonable repair costs based upon the charges
that would have been incurred had the vehicle been repaired by the insurer’s chosen shop(s).
     SECTION 2. Section 27-10.1-6 of the General Laws in Chapter 27-10.1 entitled "Motor
Vehicle Damage Appraisers" is hereby amended to read as follows:
     27-10.1-6. Conduct of motor vehicle damage appraisers.
     (a) Each appraiser, while engaged in appraisal duties, shall carry the license issued to that
appraiser by the department of business regulation and shall display it, upon request, to an owner
whose vehicle is being inspected, to the auto body shop representative involved, or to any
authorized representative of the department of business regulation.
     (b) An insurer's assigned appraiser, or representative, shall promptly schedule an
appointment for appraisal of a damaged vehicle with the auto body repair shop, at an agreed upon
date and time, between normal business hours.
     (b)(c) The appraiser shall leave a legible copy of his or her appraisal with the auto body
shop selected to make the repairs, which appraisal shall contain the name of the insurance company
ordering it, if any, the insurance file number, the number of the appraiser’s license, and the proper
identification number of the vehicle being inspected, and notice in boldface type, reading as
follows:
     “PURSUANT TO RHODE ISLAND LAW, THE CONSUMER HAS THE RIGHT TO
CHOOSE THE REPAIR FACILITY TO COMPLETE REPAIRS TO A MOTOR VEHICLE; AND
AN INSURANCE COMPANY MAY NOT INTERFERE WITH THE CONSUMER’S CHOICE
OF REPAIRER.” All damage unrelated to the incident or accident that occasioned the appraisal of
the vehicle, or old damage, shall be clearly indicated in the appraisal.
     (c)(d) The appraiser shall not obtain a competitive estimate from another auto body shop
unless the owner of that other shop, or his or her authorized agent, has inspected the vehicle. No
competitive estimate shall be obtained by the use of photographs, telephone calls, or in any manner
other than a personal inspection.
     (d)(e) No appraiser shall request that repairs be made in a specified auto body shop.
     (e)(f) Every appraiser shall re-inspect damaged vehicles when supplementary allowances
are requested by the auto body shops.
     (f)(g) No appraiser shall receive directly or indirectly any gratuity or other consideration
in connection with his or her appraisal services from any person except his or her employer, or, if
self-employed, his or her customers.
     (g)(h) No appraiser shall traffic in automobile salvage if it is obtained in any way as a result
of appraisal services rendered by the appraiser.
     (h)(i) No appraiser shall obtain an estimate from an unlicensed automobile body repair
shop nor shall any appraiser agree on a price for repairing a damaged motor vehicle with an
unlicensed automobile body repair shop. Nothing contained in this section shall be construed to
preclude an appraiser from dealing with any entity not subject to the licensing provisions of § 5-
38-4.
     SECTION 3. Title 27 of the General Laws entitled "INSURANCE" is hereby amended by
adding thereto the following chapter:
CHAPTER 10.4
MOTOR VEHICLE APPRAISAL PROVISION
     27-10.4-1. Motor vehicle appraisal provision.
     (a) When the insurance company and the insured or claimants fail to agree on the amount
of a loss, either has the right to exercise the independent appraisal process outlined in this section.
Agreements by the parties shall be binding. Each shall select a disinterested Rhode Island licensed
appraiser. The insurer's chosen appraiser shall inspect the damaged motor vehicle within three (3)
business days after the written demand is received; provided, the damaged motor vehicle is on the
premises of the repair shop when the request is made. If the insurer's appraiser fails to inspect the
damaged motor vehicle within the three (3) business days the insurer shall forfeit its right to inspect
the damaged vehicle prior to repairs, and negotiations shall be limited to labor and the price of parts
and shall not, unless objective evidence to the contrary is provided by the insurer, involve disputes
as to the existence of damage or the chosen manner of repair. The time limitations set forth in this
subsection may be extended by mutual agreement between the auto body repair shop and the
insurer.
     (b) If the two (2) appraisers fail to agree on the amount of the loss, the insurer and the
insured or claimant shall select an impartial Rhode Island licensed appraiser as an umpire appraiser.
If the two (2) appraisers are unable to agree upon an umpire within three (3) business days, the
party making the initial demand for the loss to be set by appraisal shall select an umpire. The
appraisers shall then submit their differences to the umpire appraiser. The umpire appraiser shall
render a decision within three (3) business days, and written agreement by any two (2) of the three
(3) shall set the amount of the loss. The time limitations set forth in this subsection may be extended
by mutual agreement between the auto body repair shop and the insurer;.
     (c) The insurer shall not engage in any act or practice of intimidation, coercion, threat, or
misrepresentation of consumer rights, for or against and an insured person, claimant, or entity
chosen in this process.
     SECTION 4. This act shall take effect upon passage.
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LC001988/SUB A
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